The Delta variant of the coronavirus has been a cause for concern over the past month, but it’s not affecting restaurant sales much. After a tumultuous year of sales, the industry is finally getting back on its feet.
According to the National Restaurant Association (NRA), the Delta variant may slow the recovery of the restaurant industry to some extent, but sales will still be much higher than last year. Additionally, according to a report, as of September 6, the average number of new COVID-19 cases has decreased for the first time since August 24.
The restaurant industry rebounds
The restaurant industry was hit hard last year in the wake of the coronavirus outbreak, with sales nearly at a standstill. Although the economy began to reopen in June, restaurants did not see much traffic as several restrictions were in place. This caused people to avoid restaurants and bars.
However, things started to change at the start of the year as vaccines began to roll out. Millions of people got their shot and started walking out of their homes with more confidence, which again boosted restaurant sales.
Since then, sales have increased in restaurants and bars. According to the NRA, annual U.S. restaurant sales are expected to rise 19.7% from 2020 to $789 billion this year. However, sales will still be 8.7% lower than the $864.3 billion reported in 2019.
It seems that despite an increase in new cases of COVID-19, sales in American restaurants have not been affected much. In fact, the summer so far has been good for the industry. Consumer spending at restaurants jumped 32% in the second quarter of 2021 from a year ago, according to a separate report from the NPD Group. Additionally, with the easing of restrictions, indoor or outdoor dining jumped 22% in the second quarter of 2021 compared to a year ago.
Restaurant sales are poised to grow
With millions vaccinated now, people are now more confident and physically visiting restaurants. According to a report, as of September 6, the United States had an average of 137,000 new coronavirus cases, marking a 9% drop from an average of 151,000 new cases two weeks ago on August 24.
It is also the first time since June 30 that the national average for new cases has fallen from the total average for the previous two weeks. Travel too is on the rise again and people are planning vacations. Thus, restaurant sales are expected to increase further in the coming months.
According to an article by Restaurant Business Online, citing a report by the National Restaurant Association, restaurant sales in the United States are rapidly returning to normal after a 19.2% decline in 2020, which was also the fastest year. difficult for the industry.
Given the situation, it makes sense to invest in restaurant stocks. We’ve handpicked the stocks of five restaurant players, each wearing a Zacks rank #2 (buy). You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Jack in the box inc. JACK operates and franchises through Jack In The Box quick service restaurants and is one of the nation’s largest hamburger chains. Based on the number of restaurants, the company’s top 10 markets represent nearly 70% of the total system.
The company’s expected profit growth rate for the current year is 54.8%. The Zacks consensus estimate for current-year earnings has improved 6.2% over the past 60 days.
The Wendy’s Company WEN operates through its holding subsidiary – Wendy’s Restaurants, LLC. The fast food chain, through its subsidiary, operates as a franchisor of the Wendy’s restaurant system.
The company’s expected profit growth rate for the current year is 42.1%. The Zacks consensus estimate for current-year earnings has improved 9.5% over the past 60 days.
Brands Yum, Inc. YUM is the world leader in multi-brand and offers consumers more choice and convenience in a single point of sale. The company currently reports across four segments – KFC (44.8% of total Q1 2020 revenue), Pizza Hut (18.6%), Taco Bell (35.9%) and Habit Burger Grill (0.7%).
The company’s forecasted earnings growth rate for next year is 22.4%. The Zacks consensus estimate for current-year revenue has improved 7% over the past 60 days.
McDonald’s Corporation MCD is a leading fast food chain that currently operates approximately 38,000 restaurants in over 100 countries. The company primarily operates and franchises quick-service restaurants under the McDonald’s brand.
The company’s forecasted earnings growth rate for next year is 48.6%. The Zacks consensus estimate for current-year earnings has improved 4.7% over the past 60 days.
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